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Why Canada fared well Good policy and good luck led Canada to fare "relatively well" in the recession and recovery, Bank of Canada Governor Mark Carney says. Indeed, employment and economic output have rebounded to pre-slump levels, which is unique among the G7 countries, the central bank chief said in the text of a speech he was giving today in Geneva.
"The cumulative fall in real GDP of 3.4 per cent in Canada compares with declines of over 4 per cent in the United States, 5 per cent in the euro area, and 8 per cent in Japan," Mr. Carney said.
"... Canada's better performance during the crisis can be explained by two factors. First, with a highly credible monetary policy and the strongest fiscal position in the G7, Canadian policy makers were able to respond swiftly and effectively with extraordinarily accommodative measures.
"Second, Canada's sound financial system continued to function throughout the period. It was not just that no Canadian bank failed or required government capital injections - or that extraordinary liquidity was a fraction of that in other jurisdictions. It was that credit continued to grow throughout the crisis period and into the recovery."
Why was that? "In our view, it was the result of a combination of good policy and, in retrospect, some good fortune."
Mr. Carney cited strong capital level targets for the banks, an "active" supervisory system, and a well regulated mortgage market.
He also told his audience that global policy makers must "redouble" their efforts to overhaul market infrastructure, Globe and Mail economics writer Jeremy Torobin reports.
Countries seek to stem 'hot money' Emerging economies are growing increasingly concerned, and moving to curb, so-called hot money inflows that are pushing up their currencies, in turn making their exports less competitive.
Several countries have taken steps and, today, China's State Administration of Foreign Exchange and Taiwan's Financial Supervisory Commission both announced new measures.
This comes amid a growing backlash against the Federal Reserve's latest $600-billion (U.S.) round of quantitative easing, a program aimed at pushing down longer-term interest rates by purchasing U.S. Treasurys. The program - indeed, just the anticipation of it before it was unveiled last week - has pushed down the U.S. dollar and heightened concerns of driving capital into emerging markets.
Both China and Germany have criticized the move in the run-up to the G20 meeting in Seoul this week. And late yesterday, in an interview with Reuters, Brazil's Foreign Trade Secretary Welber Barral warned that a trade war could be in the making if the G20 can't solve the problem.
"One consequence of last week's Fed action has been to put the U.S. on the defensive with respect to this week's G20 summit, as members of the G20 line up to hit out at what they perceive is currency manipulation at their expense," said CMC Markets analyst Michael Hewson.
Some observers believe the anger at the United States is misplaced.
"It is true that a lower currency is one of several transmission mechanisms through which QE would normally be expected to support the economy and put upward pressure on inflation," said Julian Jessop of Capital Economics.
"But this is nothing new and would apply to any loosening in monetary policy, including conventional cuts in interest rates. Nor does it mean that the impact on the currency is the only, or even an important, consideration."
Mr. Jessop added that the impact on the dollar has not been huge.
"The U.S. currency is roughly back to where it was before the global financial crisis (when many of the countries now complaining about a weak dollar were actually doing pretty well) ... If this is a 'currency war,' it still seems pretty phoney."
Scotia Capital economists Derek Holt and Gorica Djeric added that some countries have "a more legitimate gripe" with the Fed than others, and Germany's case is weak.
"There is no evidence that foreign portfolio flows or foreign direct investment in net two-way terms into Germany are being affected by excess global liquidity," they said.
"The country's flows are not one bit out of line with the pattern through much of the past decade ... Germany's concerns regarding QE2 by the Fed may still be legitimate, but no more so than any other generic criticism from anyone else and less so than countries that really are experiencing a surge in net capital inflows."
Outlook for oil sands grows Canada's oil sands will play an ever increasing role in energy demand as unconventional oil takes a bigger proportion of the total crude mix, the International Energy Agency says in a new forecast.
Unconventional oil is dominated by the oil sands in northern Alberta and the heavy oil reserves in Venezuela. The IEA projected today that oil sands production will climb from 1.3-million barrels a day last year to 4.2-million in 2035, "making an important contribution to the world's energy security."
Over all, China's huge appetite for fuel will push oil prices up substantially over the next two decades, the agency said in its World Energy Outlook report, Globe and Mail European correspondent Eric Reguly writes.
Notably, the IEA also said that demand for gas, where prices have slumped, will jump by 44 per cent by 2035. "China could lead us into a golden age for gas," the IEA said. "Demand in the Middle East increases almost as much."
Chevron bets on shale gas Chevron Corp. is taking a big step into shale gas, striking a $3.2-billion (U.S.) deal for Atlas Energy Inc. today. Including debt, the deal is worth $4.3-billion.
Chevron becomes the latest to bet big on natural gas, joining other energy giants such as Exxon Mobil Corp. and Royal Dutch Shell.
Atlas is a major force in western Pennsylvania's Marcellus shale play.
"We are acquiring a company that has one of the premier acreage positions in the prolific Marcellus," said Chevron vice-chairman George Kirkland.
"The high quality resource, competitive cost structure in the Marcellus, strong growth potential of the asset base and its proximity to premier natural gas markets make this targeted acquisition a compelling investment for Chevron.
"The Atlas Energy assets further advance Chevron's global shale gas position, complementing the company's recent entrance into shale gas opportunities in Poland, Romania and Canada."
Quebecor profit climbs Montreal-based Quebecor Inc. said today it boosted profit nearly 20 per cent, saw revenue rise and added a slew of new customers on its various telecommunications services in the third quarter.
The converged communications company, which owns media assets as well as the Vidéotron Ltée telecom division, beat analysts' estimates as it saw profit rise to $82.8-million or $1.28 per share, up from $69.4-million or $1.08 per share a year earlier.
"Overall, we remain positive on the company's long-term prospects, given the potential for a significant new leg of growth from wireless, supplemented by organic growth in cable from pricing increases despite slowing subscriber growth," said Desjardins analyst Maher Yaghi. "Quebecor launched wireless in the quarter and initial indications point to success. However, we believe that wireless will take a few years to materially impact profitability."
12 airlines fined Twelve global airlines have been fined nearly €800-million ($1.1-billion) by the European Commission over allegations of a price-fixing cartel.
Air France received the largest fine at €182.9-million, followed by KLM at €127.2-million and British Airways PLC at €104-million. The commission slapped Air Canada with the 10th-largest fine at €21-million ($29.1-million).
Air Canada has previously disclosed that "a provision related to investigations and proceedings related to alleged anti-competitive cargo pricing activities of $125-million was recorded in the first quarter of 2008."
TFSAs popular but misunderstood Tax-Free Savings Accounts have become increasingly popular in the almost two years since they were introduced but many Canadians still don't have a good grasp of what they can do, Bank of Montreal says in a new survey.
"While the adoption rate has been swift, we are seeing some uncertainty and confusion among Canadians when it comes to how to make the most out of a TFSA," BMO vice-president David Heatherly said in the study released today. "Much like an RRSP, TFSAs are very flexible investment tools that allow Canadians to tax shelter their investments within a number of different investment vehicles."
The BMO survey, done by Leger Marketing, showed 36 per cent of Canadians hold a TFSA but only "few" are aware of the investments they can hold:
- Less than half considered cash to be an eligible option.
- Just 20 per cent knew mutual funds were eligible.
- Just 26 per cent knew GICs could be included.
- More than one-third "have no idea what investments are eligible."
From today's Report on Business
- BHP e-mails raise doubts about future of Saskatchewan mine
- Autos 'an industry that's on the mend'
- U.S. border bridge project sidetracked again
- ArcelorMittal snags Baffinland for $433-million
And, read our Streetwise blog and Your Business section.